提问：ACCA含金量高不高？，来51题库考试学习网找答案

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(a) To: David Silvester
From:
Funding strategy for Gift Designs Ltd
Clearly, you have identified a real business opportunity and face both business and financial risks in turning the opportunity
into reality. One possible model you can use is that of the product life cycle which as a one-product firm is effectively the life
cycle for the company. Linking business risk to financial risk is important – in the early stages of the business the business
risk is high and the high death rate amongst new start-ups is well publicised and, consequently, there is a need to go for low
financial risk. Funding the business is essentially deciding the balance between debt and equity finance, and equity offers the
low risk that you should be looking for. As the firm grows and develops so the balance between debt and equity will change.
A new business venture like this could in Boston Box terms be seen as a problem child with a non-existent market share but
high growth potential. The business risks are very high and consequently the financial risks taken should be very low and
avoid taking on large amounts of debt with a commitment to service the debt.
You need to take advantage of investors who are willing to accept the risks associated with a business start-up – venture
capitalists and business angels accept the risks associated with putting equity capital in but may expect a significant share
in the ownership of the business. This they will seek to realise once the business is successfully established. As the business
moves into growth and then maturity so the business risks will reduce and access to debt finance becomes feasible and cost
effective. In maturity the business should be able to generate significant retained earnings to finance further development.

Dividend policy will also be affected by the stage in the life cycle that the business has reached.
Yours,

正确答案：

 

正确答案：
(a) Principal audit risks
Industry
‘Farming’ is an inherently risky business activity – being subject to conditions (e.g. disease, weather) outside management’s
control. In some jurisdictions, where the industry is highly regulated, compliance risk may be high.
The risks of mail order retailing ‘exclusive’ products are higher (than for ‘essential’ products, say) as demand fluctuations are
more dramatic (e.g. in times of recession). However, the Internet has provided GVF with a global customer base.
The planned audit approach should be risk-based combined with a systems approach to (say) controls in the revenue cycle.
Goat herd
The goat herd will consist of:
■ mature goats held for use in the production of milk and kids which are held for replacement purposes (i.e. of the nature
of non-current tangible assets); and
■ kids which are to be sold (i.e. of the nature of inventory).
Tutorial note: IAS 41 is not an examinable document at 2.5 and candidates are not expected to be familiar with its
requirements. However, those candidates showing an awareness that biological assets are excluded from the scope of
IAS 16 because they are covered by IAS 41 and answered accordingly were not penalised but awarded equivalent marks.
Therefore, the number of animals in each category must be accurately ascertained to determine:
■ the balance sheet carrying amounts analysed between current and non-current assets; and
■ the charge to the income statement (e.g. for depreciation (IAS 16) and fair value adjustments (IAS 41)).
There is a risk that the carrying amount of the production animals will be misstated if, for example:
■ useful lives/depreciation rates are unreasonable;
■ estimates of residual values are not kept under review;
■ they are impaired.
Tutorial note: Under IAS 41 animals raised during the year should be recognised initially and at each balance sheet date
at fair value less estimated point-of-sale costs. There is therefore a risk of misstatement if fair value cannot be measured
reliabiy (e.g. if market-determined prices are not available). However, this seems unlikely.
Kids will be understated in the balance sheet if they are not recorded on birth (i.e. their existence needs to be recorded in
order that a value be assigned to them).
The net realisable value of animals held for sale may fall below cost if they are not sold soon after reaching optimal size and
weight.
The cost of goats is likely to be subjective. For example, the cost of producing a mature goat from a kid might include direct
costs (e.g. vetinary bills and cost of feed) and attributable overheads (e.g. sheltering). Care must be taken not to carry the
goat herd at more than the higher of value in use and fair value less costs to sell (IAS 36 Revised).
Unrecorded revenue
Raised (bred) animals are not purchased and, in the absence of documentation supporting their origination, could be sold for
cash (and the revenue unrecorded).
Although the controls over retailing around the world are likely to be strong, there are other sources of income – the shop and
other activities at the farm. Although revenue from these sundry sources may not be material, there is a risk that it could go
unrecorded due to lack of effective controls.
‘Rabida Red’
The cost of an ingredient which is essential to the manufacturing process has increased significantly. If the cost is passed on
to the customers, demand may fall (increasing going concern risk).
Supplies of the ingredient, Innittu, may be restricted – further increasing going concern risk.
Any disclosure of GVF’s socio-environmental policies (e.g. in other information presented with the audited financial
statements), if any, should be scrutinised to ensure that it does not mislead the reader and/or undermine the credibility of the
financial statements.
‘Bachas Blue’
If ‘Bachas Blue’ has been specifically cited as a cause of a skin disorder then GVF could face contingent liabilities for pending
litigation. However, it is more likely that the fall in demand has threatened GVF’s going concern. As the fall in demand has
not been permanent, this threat has been removed for the time being.
The impairment loss previously recognised in respect of the equipment used exclusively in the manufacture of Bachas Blue
should be reversed if there has been a change in the estimates used to determine their recoverable amount (IAS 36
‘Impairment of Assets’).
The recoverable amount would have been based on value in use (since net selling price would not have been applicable).
GVF’s management will have to provide evidence to support their best estimates of future cash flows for the recalculation of
value in use at 30 September 2005.
Maturing cheese
The substance of the sale and repurchase of cheese is that of a loan secured on the inventory. Therefore revenue should not
be recognised on ‘sale’ to Abingdon Bank. The principal terms of the secured borrowings should be disclosed, including the
carrying amount of the inventory to which it applies.
Borrowing costs should all be recognised as an expense in the period unless it is GVF’s policy to capitalise them (the allowed
alternative treatment under IAS 23 ‘Borrowing Costs’). Since the cost of inventories should include all costs incurred in
bringing them to their present location and condition (of maturity), the cost of maturing cheese should include interest at 7%
per six months (as clearly the borrowings are specific). There is a risk that, if the age of maturing cheeses is not accurately
determined, the cost of cheese will be misstated.
Health and safety legislation
At 30 September 2005 the legislation will have been in effect for three months. If GVF’s management has not replaced the
shelves, a provision should be made for the penalties/fines accruing from non-compliance.
If the legislation is complied with:
■ plant and equipment may be overstated e.g:
– if the replaced shelves are not written off;
– if the value of equipment, etc is impaired because the maturing cheese business is to be downsized;
■ inventory may be overstated (e.g. if insufficient allowance is made for the deterioration in maturing cheese resulting from
handling it to replace the shelves);
■ GVF may no longer be a going concern if it does not have the produce to sell to its exclusive customers.
Grant
There is a risk that the grant received has become repayable. For example, if the terms of the grant specified a timeframe. for
the development which is now to be exceeded. In this case the grant should be presented as a payable in the balance sheet.
If the reason for deferring the implementation is related to cash flow problems, this could have implications for the going
concern of GVF.